The Nation Newspaper

Category: Energy

  • Privatisation: Govt reneged on power generation, funding agreements, operators allege

    The Federal Government may be the major cause of the problems being faced by the power sector after its privatisation. It has failed in most of the performance agreements signed with those who bought the power firms.

    According to the Eko Electricity Distribution Company (EKEDC) Board Chairman, Mr. Charles Momoh, and the Country Director, Energy Market and Rates Consultants, Mrs. Rahila Thomas, the government did not honour the agreements signed during the sector’s privatisation in 2013.

    Momoh said while handing over the assets, the government  promised that generation would be between 5,000 megawatts (Mw) and 7,500Mw by 2015.

    This, he said, has not happened  as agreements on improved supply of gas to thermal plants, establishment of cost-reflective tariff and payment of outstanding debts that accrued from unpaid electricity bills of customers, especially ministries, departments and agencies (MDAs), have not been respected.

    Mrs. Thomas said the transmission segment of the supply value chain works sub-optimally  because of  underfunding. She said the Transmission Company of Nigeria (TCN) was allocated N30.3 billion for capital expenditure in the budget contrary to the Multi-Year Tariff Order (MYTO) requirements.

    To buttress the huge shortfall in capital expediture allocation, she stated that MYTO requirement for 2016 is N205 billion. For 2017, it is N419 billion and N265 billion for 2018.

    She also noted that donors indicated their intention to provide $623 million for the transmission segment but nothing has been done three years after the pledge.

    Momoh and Mrs. Thomas spoke when the Senate Committee on Privatisation, led by its Chairman, Senator Ben Bruce, visited Eko Electricity Distribution Company (EKEDC), Lagos.

    Eko DisCo Chief Executive Officer Dr Oladele Amoda listed the challenges and achievements of the company, including the huge debt of about N10.7 billion owed by customers, power theft and meter bypassing by customers, among others.

    He appealed to the Senators to make a law that would prescribe stringent punishment for offenders involved in vandalisation of equipment, theft and tampering with meters. He urged the lawmakers to include in the 2017 budget appropriation the debts owed by MDAs.

    Bruce said the visit became imperative because people were questioning the privatisation process; “some said it was a mistake to have privatised the sector and why there has not been improvement in power. The generation level has not changed from what it used to be before privatisation. So the committee had to go round privatised entities to know the problems.”

    The committee chair said it was inexplicable that power output had not improved since the sector was privatised three years ago.

    The Federal Government owes the sector N900 billion. Bruce said it would be extremely difficult for the Senate to approve N1 triilion for the government to pay for debts when there was no output to justify such payment.

    The Committee promised to meet other DisCos, Appropriation and Budget Committees as well as stakeholders to find lasting solutions to the problems.

    The committee said the Senate would, before the end of the year,  draft a law against power theft, vandalism of equipment and meter bypassing. It also pledged to appropriate the fund to pay the debts owed the power firms in the 2017 budget, and also meet with the Central Bank, DisCos and the Bureau of Public Enterprises (BPE) to solve the problem of accessing foreign exchange by power companies.

  • IPMAN: Investment in refineries ‘ll boost fuel supply

    The Federal Government’s move to woo foreign companies to set up refineries in Nigeria will improve distribution of petroleum   products, Independent Petroleum Marketers Association of Nigeria (IPMAN) National Chairman Chief Chinedu Okoronkwo has said.

    The Minister of State for Petroleum Resources, Dr Emmanuel Kachikwu, at a stakeholders’ forum in Abuja, invited investors  to  set up refineries in Nigeria.

    To Okoronkwo,  that  would help  grow the downstream segment of the petroleum industry. He said:“Plans by the Federal Government to welcome foreign investors wishing to invest in refineries in Nigeria is a good one. ‘’Such investment is capable of improving activities in the downstream sub-sector. Apart from the fact that the initiative would boost supply of fuel, it would help both independent and major marketers to expand their operation by opening up more outlets in the country.”

    He said the industry is grappling with problems of refining and supplying fuel to end users, adding that the problems would be addressed once crude oil is refined maximally in the country.

    He stated that many people have lost their jobs due to problems such as fall in oil price, oil theft and other untoward practices in the country. He noted that more jobs would be created if such refineries are built in Nigeria.

    According to him, local and foreign-owned refineries would create opportunities for people who wish to work in the refineries, depots, retail outlets and others. The idea would also provide materials for petrochemical industries especially those that are producing water tanks, plastic chairs, slippers, orthodox drugs and others, he said.

    ‘’The issue of allowing foreigners to own refineries as proposed by the Federal Government comes with a lot of benefits. Stakeholders in the value chain will benefit from it in one way or the other. Of note is that marketers will record more profits, which when ploughed back into the system, would improve activities in the downstream segment of the oil industry,’’ he added.

    Okoronkwo advised the government to fast-track the process of bringing companies that will refine crude oil in Nigeria, adding that the initiative would help in reviving the oil industry.

    The former President, International Association of Energy Economists (IAEE), Prof Adeola Akinnisiju, said the more firms that refine crude in Nigeria, the better for the downstream and the economy.

    He said the economy would improve once there is uninterrupted fuel supply in Nigeria, stressing that the economies are doing well abroad because they grow their oil and gas sector well.

    Nigeria’s Dangote refinery, however, will kick off production in 2018. The refinery has an initial production capacity of 450,000 barrels per day, and remains the biggest privately owned refinery to have such capacity in West Africa.

  • Fed Govt invites World Bank, others for power supply

    To boost power supply, the Federal Government has invited World Bank, International Monetary Fund (IMF), African Development Bank (AfDB), United States Agency for International Development (USAID) and others, which have huge portfolios and interests, to invest in energy.

    The government is seeking investment in power generation, distribution and transmission.

    The Minister of Power, Works and Housing, Mr. Babatunde Fashola, made this known during a panel discussion at the 5th European Union- Nigeria Business Forum at the Eko Hotel, Lagos.

    He said the funding gap in the sector was wide and required investments to improve electricity supply and the economy.

    In his keynote address entitled Financing the power sector, Fashola said the sector has huge investible propositions, which only bigger corporations have the capacity to meet, adding that the sector has the capacity to provide returns on investment for any company that invests in it.

    He said the government was striving to provide an enabling environment through its policies to guarantee adequate returns on investment.

    Fashola said: “Without doubt, bad environment is a problem, which the government is trying to address. It is obvious that the power sector has huge potential, which can only be realised with the right environment.

    “When one considers that the sector is broken into 11 power distribution companies (DisCos) and six power generation companies (GenCos), one would see that there is huge potential in the industry. This is the reason the Federal Government is asking investors, especially global financial institutions, to invest in the sector.”

    The Head, Economic Cooperation and Energy Section, European Union, Mr. Juan Casla, said power sector was crucial to the growth of any nation, urging the Federal Government to put in place measures that would foster its growth.

     

  • Ikeja Electric, UBA partner on payment terminals

    Ikeja Electric has launched payment terminals in 20 United Bank for Africa (UBA) across its network offices.

    The terminals will provide a secure and convenient payment option for customers in those locations.

    Its Head of Corporate Communications, Felix Ofulue, said the initiative would enable Ikeja Electric  to bring efficient service closer to customers.

    “We are confident that the addition of these payment terminals will help us to do an even  better job of meeting the needs of our customers, in making payment of bills a lot easier and more convenient, while also improving their overall experience”, he said.

    “We are committed to providing our customers with the greatest level of customer service and introducing these secure and convenient payment terminals is yet another aspect of our service offerings”.

    Ofulue appealed to customers to take advantage of the proximity of these payment terminals  and avoid making payments to any staff of Ikeja Electric, noting that the company’s linesmen, engineers and technicians are not commissioned to receive cash payments of any kind.

    The terminals are in UBA branches in Akowonjo, Abule Egba, Ijaiye Ogba, Akute, Allen Avenue, Ogudu, Ikeja GRA, Ojodu, Ikotun and Ketu.

    Others are in Ikorodu, Okota, Bank Anthony (Ikeja), Simbiat Abiola Way (Ikeja), New Oko-Oba, Iju, Dopemu, Iyana Ipaja (NYSC),Oba Akran and Oregun branches.

  • Over N200b debt threatening our, say GenCos

    Over N200b debt threatening our, say GenCos

    •Operators seek lifeline from govt

    Power generation companies (GENCOs) have said the over N200 billion debt owed them by customers may affect their operations if the government does not intervene fast.

    Association of Power Generation Companies (APGC) Executive Secretary Dr. Joy Ogaji said the matter was getting to crisis point. She warned that cessation of operations was imminent as the bulk trader, the Nigerian Electricity Bulk Trader (NBET), is unable to commit to the terms of the power purchase agreements (PPAs) signed with them.

    She said despite the GenCos’ willingness to deliver power in line with the terms of their PPAs, they were unable to do so because of the huge debt.

    Dr. Ogaji said: “In the run-up to the Nigerian electricity sector privatisation, the government promised to set up NBET to shield GenCos from the vagaries of the market, and venturing to invest in the power generation assets was predicated on the promise by the bulk trader to shield the GenCos from these problems irrespective of what happens in the downstream sector of the industry.

    “The worsening market liquidity squeeze has culminated in a situation where the GenCos lack the necessary funding for their operations, acquiring spare parts and equipment for the power generation stations. Some GenCos have not been able to pay their workers for several months.

    “Most of the GenCos are frustrated by NBET’s poor settlement of their invoices (less than 20 per cent). The inability of NBET to handle payments to the GenCos in accordance with the PPAs they have with the agency is strangling their operations.”

    She said NBET that is supposed to help appears to be helpless, more in need of help than the GenCos.

    Dr Ogaji said NBET’s inability to help the GenCos resolve the chronic poor market liquidity challenge has affected  their  operations.

    “If the GenCos are to play their role in the power supply value chain, they must be saved the agony of the debt squeeze, which is threatening most of them to buckle under the weight,” she noted.

    The executive secretary assured that the GenCos were ready to explore all dispute resolution mechanisms including litigation, to test the PPA they signed with NBET.

    In the alternative, she said the association resolved that government should allow the GenCos to take advantage of the provisions of the EPSR Act 2005, which empowers eligible customers to bypass the wholesale electricity market and enter bilateral contracts with any willing eligible customer.

    Dr Ogaji said although the GenCos, at inception, were contractually obligated to ramp up electricity generation capacity by about 5,000 megawatts (Mw) over a five-year period, most of them have exceeded their targets. They were being faced with the issue of stranded capacity.

    For instance, she said Ughelli Transcorp, which had 160 Mw generation capacity at takeover, reached the 450 Mw capacity by September 2016, while Egbin at takeover in November 2013, had average 300 Mw generation due to the dismal state of its six units.

    Ogaji said Egbin plant has the capacity to generate an average of 1,100 Mw on availability of gas, saying when the overhaul of the remaining units is completed next year, the station would be operating at a minimum of 92 per cent of its capacity.

    She said when the overhaul of the remaining units is completed next year, the station would be operating at a minimum of 92 per cent of its capacity.

  • Shell donates N1b library to Literary Society

    Shell donates N1b library to Literary Society

    An e-library donated by Shell PetroleumDevelopment Corporation(SPDC) to the Port Harcourt Literary Society has been opened.

    The N1.03 billion library is one of the N2 billion social investment projects Shell sponsored in the Niger Delta to mark Nigeria’s centenary anniversary.

    The others are a hospital and sports centre in Bayelsa and Delta states. Shell spent N790 million on the project that was implemented via a Memorandum of Understanding (MoU) with the Port Harcourt Library Society, which contributed N240 million.

    ‘’SPDC invested exclusively on this library project because of its strong conviction that it will deliver significant benefits and positively impact the lives of the people,’’   Managing Director, The Shell Petroleum and Development Company of Nigeria Limited (SPDC) and Country Chair Shell Companies in Nigeria, Osagie Okunbor, said.

    “We are pleased to deliver an ultra-modern public library that would rank as one of the biggest and most IT-driven in the country. The feedback we’re receiving shows that the literary scene in the Garden City has already changed,” he added.

    The National Librarian Prof Lenrie Aina said the facility, named Port Harcourt Literary Society Library, was the “first complete public library in Nigeria.”

    Rivers State Deputy Governor Dr. Ipalibo Banigo, represented by her Senior Special Assistant, Mrs. Inegogo Fubara, thanked SPDC for supporting the state government’s desire to provide sustainable and affordable education to the people.

    Port Harcourt Literary Society Board of Trustees Chairman Dr Chidi Amuta said the library was designed to be the heart of the Port Harcourt Book Centre that was originally conceived to commemorate the recognition of Port Harcourt by UNESCO

  • ‘How fake products affect oil’

    Adulterated petroleum products, including lubricants, are affecting the market share and profit margins of operators, A-Z Petroleum Limited Executive Director Mr Dikanna Okafor has said.

    Speaking on the sideline of the just-concluded Oil and Gas Logistics Expo in Lagos, Okafor said the firm had seen people selling fake lubricants and other fake products but it could not do anything.

    He urged stakeholders, including the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation, the Department of Petroleum Resources (DPR), to proffer solutions to the problem.

    Okafor said: “The firm will help in creating awareness for the growth of the sector. We know that fake lubricants are being brought into the market daily. We would try to educate consumers on what and how they can get value for their money by patronising quality products. We hope the issues surrounding fake products would be addressed soon.

    “We constantly seek opportunities to reiterate our commitment in the industry, and this is one event we are excited we are part of. Every developed country is driven by industrialisation and one thing common in industrialisation is machineries need lubricants to function effectively.

  • ‘Nigeria’s gas output can deliver 32 Gw of power’

    If dysfunctional gas facilities are fixed and fiscal and regulatory policy issues in the gas subsector addressed, the current gas production can deliver 32 gigawatts (32,000Mw) of power, oil and gas industry operators have said.

    This was contained in a communiqué at the end of the three-day international gas conference of the Nigerian Gas Association (NGA) held in Abuja.

    It was signed by the association’s president, Mr. Dada Thomas, and made available to The Nation

    Giving the verdict, they said there is a need to urgently fix the dysfunctional gas-to-power value chain, to attract investment to the sector. There is also the need for the government to respect the sanctity of contracts and agreements.

    According to them, the illiquidity of the power market requires urgent attention. “We suggest a rethink of the quality and capitalisation of players, and a readjustment of the tariff structure may be required. Without a doubt, we must find creative securitisation mechanisms that improve bankability,” they added.

    On gas policy, the communiqué noted that the conference recognised the role of the NGA in creating sustained awareness on issues, and the opportunities within the gas sector. It posited that the association should continue to work with the government and stakeholders to harness gas as a catalyst for sustained economic development with the right regulations and policies.

    “The emerging gas roadmap by the government is a welcome development that could provide the much-needed clarity on issues of ownership, infrastructure development, gas gathering and pricing.

    “The association will mobilise the sector to do a proactive review of the Draft Gas Policy to provide a win-win document that will attract the required investment for the sector. The intent would be the reduction of lead-time between policy formulation, legislation and implementation to enhance the competitiveness of Nigeria as a preferred gas investment destination,” it said.

    According to the communiqué, the conference recognised the need to nurture the willing buyer-willing seller commercial model that will encourage and sustain the gas value chain, from the reservoir to the consumer.

    It also saw the need to encourage investment in exploration for gas to increase national reserves and facilitate access to such reserves by competent operators. It recognised the threat to security in the Niger Delta and acknowledged the progress being made to address the menace. “We agree that the sector must join hands with government to support intelligence based security arrangements.

    “NNPC Joint Venture funding continues to constrain rapid development. We support the efforts towards finding alternative funding mechanisms.

    “There is slow decision making by policy makers and regulators and conference strongly recommends a collaborative model to find fast track processes and solutions that achieve the desire for Nigeria to be a gas-based industrialised hub meeting both local and export demands.

    “Conference believes that financing is possible if the right conditions for success such as fixing the gaps in the value chain, avoiding policy summersault, honouring sanctity of contracts, stabilisation of the exchange rate, long term view of fiscal policies are in place.

    “There exists the need for approximately $51 billion in investment in the sector to cover gas exploration, processing, transportation and general infrastructure. Whilst acknowledging the funding constraints of government at this time, we still agree that such investments must be Government led. It might require creative schemes to leverage the existing assets and infrastructure,’’the communique added.

    “The need to establish a Gas Promotion Council that will address investment opportunities in the sector was raised. The NGA puts itself forward to midwife same if it finds government’s interest,” the communiqué added.

  • Phanes Group to deliver 100Mw in 2018

    Phanes Group, an international solar energy developer, investment and asset manager based in Dubai, is to develop three 100 megawatts (Mw) grid-connected solar plants in Nigeria.

    The projects will raise Nigeria’s  solar capacity and boost government’s effort to generate 2000Mw of power from renewable sources by 2020. The projects are in three locations, the Mando area of Kaduna, Birnin-Kebbi in Kebbi and Sokoto in the Northwest.

    The Sokoto project will benefit from one of the highest irradiation levels (2210 kwh/m2/year) in the country, and is backed by one of the 14 Power Purchase Agreements (PPAs) with utility-scale solar power developers, which will add around 1,200Mw of solar capacity to the grid.

    The first 50Mw of the Sokoto project will be grid-connected in the first quarter of 2018, and the project is expected to be completed by the end of that year.  The Kebbi and Kaduna projects will be delivered under the Hasken-Rana brand (meaning ‘sunshine’ in Hausa) – a joint venture between Phanes Group and its Nigerian partners. They will be completed before the end of 2019.

    Phanes Group Chief Executive Officer Martin Haupts said: “Nigeria’s policy makers have worked proactively to address the nation’s immediate and long term electrification challenges through the introduction of attractive clean energy policies, and we are beginning to see the fruits of those policies.

    “Despite its challenges, Nigeria’s potential for solar development is unquestionable and from a standing start it may soon emerge as solar leader among its sub-Saharan African peers. These new commercially viable projects demonstrate the strength of public, private partnerships whilst setting Nigeria on positive to course greater energy security and economic development – a model for African solar deployment.”

    The Federal Government’s target is that 75 per cent of the country would be grid connected by 2020 at 1.5 million households yearly.  In addition to grid extensions, Nigeria will also seek non-grid solutions from renewable sources such as solar, wind and medium hydro to ensure communities have equal access to a secure power supply, phasing out expensive diesel powered generators.

    “We are committed to realising Africa’s solar potential which also means identifying ways of utilising our off-grid and micro-grid expertise to light up remote communities too,” said Andrea Haupts, Chief Operating Officer, Phanes Group.

    “In parallel with our utility scale grid-connected work we will pursue and deploy solar to Nigeria’s rural communities where citizens are being held back by a lack of electrification – helping to transform the lives of millions of Nigerians,” Haupts added.

  • Ikeja DisCo, landlords disagree over re-routing of high-tension wire

    Ikeja DisCo, landlords disagree over re-routing of high-tension wire

    The Ikeja Electricity Distribution Company (DisCo), now Ikeja Electric (IE), and some landlords at Abule- Egba, a suburb of Lagos, are at loggerheads over the re-routing of a high tension wire, which will pass over the building of one of their own.

    Ikeja DisCo had, on October 18,   erected a high tension wire over  a building at 5, Abiodun Onitiri Street, Abule Egba, which belongs to The Nation man Mr. Godfrey Iriogbe.

    The wire formerly passed over a mosque.

    The development has drawn the ire of landlords in the area, after efforts and entreaties by Godfrey to dissuade IE Abule-Egba Business Unit from rerouting the high tension line failed.

    With that decision, the utility firm has put the lives and property of the people living in the bulding in danger.

    Iriogbe stated that when he contacted the Business Unit of Ikeja Electric in Ijaiye Ojokoro and it refused to heed his pleas, he wrote a letter to the firm’s headquarters in Alausa, Ikeja, Lagos.

    Landlords in the area said Ikeja Electric was not being fair to the Iriogbe’s family. They said the firm did not following due process in erecting the wires on Iriogbe’s property, adding that Ikeja Electric could do the same to any of them in future, if the government and IE management did not intervene to save the situation.

    One of the owners of properties in the area, who simply identified herself as Mrs. Odigbe, said the landlords expected the Abule-Egba unit of IE to retain the line on its original position.

    She said: “Why I and other landlords in the area are not happy is that we discovered that the Abule-Egba unit was erecting the wires on top of Iriogbe’s property. Why should the firm do this to Iriogbe’s family? The company is setting a bad precedence. The implication is that any of the landlords can be a victim in future. That is the reason landlords are appealing to Ikeja Electric management to be fair on the issue.

    Iriogbe said the Abule-Egba District management disregarded due process by passing high tension wires over a residential building knowing the dangers of their action, especially when such wires are being removed from their original position.

    He alleged foul play in the matter, accusing the district and the contractor handling the project of trying to favour some people to his detriment.

    He urged IE to be fair by returning the wire to its former place.

    “It is obvious that the mosque, which originally housed the wires and my father’s property, were metres away from each other. How can one explain a situation where wires were taken from a property to another one’’, he asked.

    The Business Manager, Ijaiye Ojokoro Business Unit of IE, Abdullahi Mohammed, was not available to comment on the issue, when The Nation visited his office; but the Head, Network Operation, Mr. Olufemi Adebayo said due process was followed on the issue.

    He said many of the landlords failed to meet town planning rules and regulation, including providing 30 centimetres setback to the road before building their houses. He said the landlords would not do themselves any good by complaining about the issue because they were all guilty of the offence and would have problems with the government, once the government decides to act on the issue.

    IE Head, Corporate Communications, Mr. Felix Ofolue, said he expected the issue to have been sorted out by now.